Monday, September 24, 2018

T-Mobile is rebranding its MetroPCS prepaid business unit with the new moniker Metro by T-Mobile. Honestly, it's time or should have been done maybe two years after the MetroPCS was acquired at the end of 2012 and closed in early 2013. The PCS part of the brand harkens back to the PCS spectrum the company was operating. Quite frankly, the industry shortcut nomenclature was always Metro, so BFT.

How we got here: T-Mobile CEO John Legere teased a series of Twitter posts last Friday, the 21st.

With T-Mobile and Legere promoting a "LegereForBatman" campaign, you'd think maybe another T-Mobile executive could have been the Riddler as a stretch joke.

But long-time industry observers may have noted the Legere tweet's question marks were the MetroPCS colors. Even T-Mobile CFO (also ex-MetroPCS CFO) Braxton Carter weighed in on John's tweet:

Plan Changes

Aside from the Metro rebrand, the other announcement component is the revised plans. The new $50 and $60 plans are more competitive not just for the additional hotspot data ($50 from 0 -> 5GB and $60 from 10 -> 15GB) but it's notable that marquee external partner value has been to the prepaid segment. The inclusion of Google One storage and Amazon Prime membership in a plan is something out of a postpaid plan playbook.

But that's the point that T-Mobile is making; the lines between postpaid and prepaid are getting blurred. However, that's not entirely true. The fine print says that Metro subscribers will get throttled when there is congestion so that T-Mobile One (postpaid) users have data priority. Still, the new plans validate a long standing effort to boost the prepaid average revenue per user by focusing higher plan price points. Moreover, another trend is to promote family lines. The value proposition here, similar to postpaid, is that family plans decrease churn. Churn is especially critical in the prepaid sector, where the price sensitive customer has a tendency to jump providers for the best deal. So the introduction of Google One and Amazon Prime membership are more anti-churn value components to sweeten the pot and to move the conversation away from the traditional lowest monthly cost mindset.

Big Picture

Step back and look at the macro view. After blistering growth since integration, T-Mobile prepaid (predominantly MetroPCS) has cooled since 2Q17. While Metro has slowed, arch rival AT&T's Cricket side has greater growth momentum than Metro.

Meanwhile, Sprint's and American Movil's Tracfone prepaid units continue to recover from staggering losses due to its earlier bets on the lifeline segment (Assurance and SafeLink). In the near term, it's looking like a two carrier race. We'll see what happens in 4Q if these plans can make an impact. The yea's not done yet; competitors may also get into the value race as holiday sales take shape.

Thursday, September 6, 2018

Ronan Dunne, the current CEO of Verizon Wireless popped up on the news led by an article in the UK's Telegraph business pages this past Saturday, Sept 2. The gist of the speculation is that he was in the UK in the previous week supposedly interviewing for the BT CEO job. His background seems right as he had been an O2 (BT's wireless carrier competitor) since 2001 with stints as CFO in 2005 and ultimately the CEO from 2008 to 2016.

In 2016, he joined Verizon and how he got here to the States was a subject of an thorough Independent piece. Much has been speculated that he was looking for a new position after Hans Vestburg got the Verizon CEO nod. I noted that he could have been a candidate for the the Lowell McAdam vacancy in an earlier June blogpost but there were stronger candidates.

Here are some quick pros and cons for Dunne to take the BT CEO helm:

Pros

As a European and as a long time area telecom hand, he already has the knowledge base for the continent and appreciates the complexities and quirks of each country.

Dunne had a successful track record at O2 but in the year plus, he's gained the experience of running a far larger wireless operation with different challenges and buyer demographics (i.e. predominantly postpaid). Under his watch, unlimited plans returned to the service portfolio and eliminated the stigma that Verizon was the sole non-unlimited plan provider.

Since American 5G planning and deployment has exceeded that of European counterparts, Dunne's competitive advantage will be the insight of getting ready for 5G fixed and mobile services.

If BT takes Dunne on, he's be an experienced European CEO but with a fresh and valuable external perspective.

Cons

BT is more than a wireless company and Dunne doesn't have any direct landline operations experience. While many telecom companies such as AT&T, Verizon and BT have integrated as 'one' company, the businesses are a bit different. If it's like the American landline experience, he'd have to figure out a way to slow or reverse subscriber losses.

According to the Telegraph article, Patterson, the ex-BT CEO was bogged down in regulatory fights. Although Dunne knows the European regulatory scene, he has also battled with them. His last regulatory fight ended with the denial of the Hutchinson of O2.

Dunne's contract at Verizon may be the wild card. Does it allow him to get out of his duties and with what penalties or forfeitures of substantial bonuses. Is there a non-compete that will limit him? Will the Verizon Board and Vestburg make a play to retain him?

On paper, Dunne as an experienced executive is fit to lead BT and like many job opportunities, it may be fit, chemistry and upside in the decision making process. I guess we'll see soon what happens as BT needs to fill the vacancy quickly.